A 1900 political question of interest to Morgan dollar collectors. Were 5 silver dollars equal to one half eagle gold coin, or not? Was a silver certificate equally exchangeable?

Farmers Mutual Fire Insurance Company
Lake City, Iowa

May 9, 1900

Hon. George E. Roberts
Washington, D.C.

Dear Sir:
As there is constantly some question coming up in regard to the gold standard and as our Demo [ed. – Democratic Party] Friends are very busy trying to find something to talk about, and I am not as well posted on the new currency bill as I ought to be, I thought you might be able and willing to assist in settling some of these questions. First, as the new currency Bill does not authorize the direct redemption of silver and silver surtificates [sic] in gold, how are they to be kept at a parity? The way a Friend of mine put the question to me was this (by the way he is a strong Bryan supporter): if on my way to Paris in June I should stop at the sub-Treasury at New York with my currency of silver and silver surfiticates [sic] and ask for gold, to the amount of $1,000.00, would they exchange it. This and any other currency questions, written documents bearing on the campaign this fall, will be thankfully received.

Yours truly,
J.L. Hibbs

[RG104 E-229 Box 115]

Last edited by RogerB on Sun Feb 09, 2020 7:51 pm, edited 1 time in total.

It is all relative. This happens to be a central (or the central) political argument at onset of the 20th century. It is as abstract as money itself. What is it worth in real terms? What are you willing to do to obtain it? What are you willing to part with in exchange for it?

But if we are 'going for gold' it doesn't get any better than this one. Got to hold it, but could never hope to own it. Turns out it wasn't actually for sale even though it was being auctioned.

I'd say under ordinary circumstances, yes, but it's not that clear cut. If you spent a 5 dollar gold piece, you'd almost certainly get some or all your change in silver. As the letter that prompted this thread mentions, there was a great deal of politics muddying up gold vs silver. It's interesting that the law at the time read that silver certificates were redeemable for silver dollars and gold certificates were redeemable for gold coin. If you tried to redeem one for the other, you could be refused.

I'd say under ordinary circumstances, yes, but it's not that clear cut. If you spent a 5 dollar gold piece, you'd almost certainly get some or all your change in silver. As the letter that prompted this thread mentions, there was a great deal of politics muddying up gold vs silver. It's interesting that the law at the time read that silver certificates were redeemable for silver dollars and gold certificates were redeemable for gold coin. If you tried to redeem one for the other, you could be refused.

It is all relative. This happens to be a central (or the central) political argument at onset of the 20th century. It is as abstract as money itself. What is it worth in real terms? What are you willing to do to obtain it? What are you willing to part with in exchange for it?

But if we are 'going for gold' it doesn't get any better than this one. Got to hold it, but could never hope to own it. Turns out it wasn't actually for sale even though it was being auctioned.

An interesting question and one I would have thought established by Congress or the Mint. I assumed you could get there by swapping your silver certificates for a gold certificate and then swap it for real gold.

Seems reasonable to us, today. But in 1900 the legal backing for each type of paper currency was different. Gold certificates were not 1:1 in gold coin or bullion - but less than 100%. The question in the original letter would seem valid for the time: If one brought $1,000 in silver certificates to a sub-Treasury (or bank) could the presenter receive $1,000 in gold coin?

[PS: One of the internal goals of leaving the "gold exchange standard" was to make every dollar equal to every other dollar.]

Well the question is really interesting and the price of metals and available bill denominations would have obviously come into play. I think gold was pegged at $20.67 in 1900. If silver was pegged at about $1 an ounce then was the gold silver ratio 1:20.67? I don't have the research, but I thought $1 gold coins were pretty rare or non-existent.

I think the smallest denomination Gold Certificate was $10, but in 1900 the lowest ever printed was $20 and I assume worth about one ounce of gold? And could a $10,000 Gold Certificate therefore be redeemed for about 500 ounces of gold? (Tells us something today since 500 ounces of gold would be about $750,000)

Also, if I remember my banking correctly $100,000 notes of any kind were reserved for use by banks for settlement and did not circulate.

Wikipedia has a pretty good summary of the notes issued https://en.wikipedia.org/wiki/Gold_certificate There are some guys honored on these notes that I never heard of until now. Obviously these don't circulate anymore but I wonder what a $10,000 gold certificate sells for these days as a collectible?

Silver certificates were backed by silver dollars. The market value of silver contained in the coin was immaterial - it was "one dollar."

Gold certificates/notes were backed by gold metal itself - not a specific coin. In 1900 the backing was 2/3 gold coin and 1/3 bullion. But - total gold backing paper was only about 1/2 (or less--memory is fuzzy) of the face value of the note.

Does the Gold Standard Act of 1900 offer any guidance to the original quandary?